Senate gives HSBC an American Nightmare

Excerpt:

HSBC’s history in the US stretches back to the 1850s, but rarely can Britain’s biggest bank have endured a worse week in the home of capitalism. A blistering 335-page report from a leading Senate committee detailed how the bank’s failure to enforce anti-money laundering laws left America’s financial system exposed to Mexican drug cartels, a Saudi bank with ties to al-Qaeda and rogue nations such as Iran and Sudan. Carl Levin, the senator who led the year-long investigation culminating in the report, described some of its findings as “stunningly unacceptable.”

Ms Dorner told the senator that HSBC is in the US to help American companies do business in Asia, where the bank has historic ties. However, the report paints a picture in which its American operations were seen as the easiest vehicle around to launder money. Nowhere does this view appear to have been clearer than in Mexico, where HSBC expanded aggressively with the purchase in 2002 of Banco Internacional for $1.1bn.

HSBC knew from the start that the bank, Mexico’s fifth largest, had problems. David Bagley, who dramatically quit as head of global compliance during Tuesday’s Senate hearing, wrote to colleagues shortly after the purchase that anti-money laundering (AML) practices at the bank were “virtually non-existent”.